Venezuela Is Now More Than 50% Dollarized, Study Finds

[senin]

https://www.bloomberg.com/news/articles/2019-11-05/venezuela-is-now-more-than-50-dollarized-study-finds

Venezuela’s economy is increasingly dollarized, with more than half of retail transactions now being carried out in U.S. currency, a study found.

An estimated 54% of all sales in Venezuela last month were in dollars, according to a survey by Econoalitica, a Caracas-based research firm.

In Maracaibo, the country’s second-largest city, about 86% of all transactions took place in dollars, according to the study. The city has been one of the worst hit by blackouts, which has rendered credit card readers useless for days on end.

As Venezuela has become dollarized, inflation has come down. Even their idiot president Maduro admits the dollarization (which was done by citizens spontaneously ignoring their govt's ban on dollars) is a good thing.

A year ago, some of us were hoping that Venezuelans would have adopted bitcoin as their currency (or an alt). But the rolling electricity blackouts not only mean you can't use credit cards, but you can't use cryptocurrency. So they've gone with old fashioned US dollars in cash.

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

Yes, an interesting situation. The Venezuelan government, represented by President Maduro, has launched an economic war with the United States and its dollars, and now they recognize that dollars are good for the country. Moreover, neither the national cryptocurrency Petro nor the transition to the payment of pensions and other payments in bitcoins saved the Venezuelan economy. Cryptocurrency did not help here, probably due to inept management of the economy.
The problem of introducing high technologies is also raised here. Practice shows that you should not fully rely on them, along with them should be back-up options for conventional technologies. Therefore, do not give up cash.

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[DaftAjax]

They need stable currency, that is true. But is it foreign currency solution? This is also the way that one country colonize the other, in a way. Bitcoin can't help the country, it can only be support for individuals but it can't save economy and financial system in Venezuela. They need help but not in a way that will longterm only make them weaker and more vulnerable.

Using local currency will not help either, considering they would rather use a foreign currency. True, it could mean a way of colonizing. I guess they should fix internal affairs first, as the OP said the Electricity as well as maybe changing their leader, they seem to not know how to run a country. I'm not a person that indulges into politics but at least I know if that politician fits for the role or not.

[royalfestus]

Investing in cryptocurrency might require high fund but trading cryptocurrency does not necessarily require high fund. Although bitcoin may look high price to venture into, thats why satoshi can take go round as individual can acquire.Solving Inflation goes beyond the adoption of dollar to settle the economic situation, government do more into production, international exchange, corruption and other economic management policies.

Venezuela had issues with their economy situation, not with trading issues sadly. Usage of dollar helped them alleviate the problem, but without fully adopting it, problems would still probably arise, that is until they are able to manage their own currency, or they fully adopt the usage of dollar in their country.

Poor countries would probably have the ability to adapt to crypto in the long term, just not now. Crypto is considered more right now as an investment, and naturally, only those abled countries could possibly trade them. Especially with the requirement of electricity and Internet access.

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

Am addressing this OP's opinion, I might not quote it

[alyssa85]

Yes, an interesting situation. The Venezuelan government, represented by President Maduro, has launched an economic war with the United States and its dollars, and now they recognize that dollars are good for the country. Moreover, neither the national cryptocurrency Petro nor the transition to the payment of pensions and other payments in bitcoins saved the Venezuelan economy. Cryptocurrency did not help here, probably due to inept management of the economy.
The problem of introducing high technologies is also raised here. Practice shows that you should not fully rely on them, along with them should be back-up options for conventional technologies. Therefore, do not give up cash.

I'd forgotten about the Petro!!!

Doesn't that illustrate that whether a currency gets adopted or not is down to TRUST?

If Venezuela had a competent government and they issued a cryptocurrency backed by oil - which they have vast quantities of - the Petro would have taken off. It failed because people didn't trust Maduro.

But people trust dollars. So that's what they've spontaneously adopted.

[mamahdedeh]

Yes, an interesting situation. The Venezuelan government, represented by President Maduro, has launched an economic war with the United States and its dollars, and now they recognize that dollars are good for the country. Moreover, neither the national cryptocurrency Petro nor the transition to the payment of pensions and other payments in bitcoins saved the Venezuelan economy. Cryptocurrency did not help here, probably due to inept management of the economy.
The problem of introducing high technologies is also raised here. Practice shows that you should not fully rely on them, along with them should be back-up options for conventional technologies. Therefore, do not give up cash.

I'd forgotten about the Petro!!!

Doesn't that illustrate that whether a currency gets adopted or not is down to TRUST?

If Venezuela had a competent government and they issued a cryptocurrency backed by oil - which they have vast quantities of - the Petro would have taken off. It failed because people didn't trust Maduro.

But people trust dollars. So that's what they've spontaneously adopted.

policies that are not supported by society, will bring a turning point that is not in accordance with its objectives. Although the government has set the rules, the motion of trust in the government has not yet been maximized, and this is what prevents crypto from developing

[blckhawk]

Another problem arose amidst the hopes of cryptocurrency "saving" a failing economy. Such real-life examples bring out the issues that needs to be addressed, and what are the possible hindrances to adopting cryptocurrencies in solving such cases.

Paper money still has advantages over digital currencies. They provide anonymity, fast exchanges, and also not relying on any technology aside from it existing on a paper.

[NathanJB]

https://www.bloomberg.com/news/articles/2019-11-05/venezuela-is-now-more-than-50-dollarized-study-finds

Venezuela’s economy is increasingly dollarized, with more than half of retail transactions now being carried out in U.S. currency, a study found.

An estimated 54% of all sales in Venezuela last month were in dollars, according to a survey by Econoalitica, a Caracas-based research firm.

In Maracaibo, the country’s second-largest city, about 86% of all transactions took place in dollars, according to the study. The city has been one of the worst hit by blackouts, which has rendered credit card readers useless for days on end.

As Venezuela has become dollarized, inflation has come down. Even their idiot president Maduro admits the dollarization (which was done by citizens spontaneously ignoring their govt's ban on dollars) is a good thing.

A year ago, some of us were hoping that Venezuelans would have adopted bitcoin as their currency (or an alt). But the rolling electricity blackouts not only mean you can't use credit cards, but you can't use cryptocurrency. So they've gone with old fashioned US dollars in cash.

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

Dollar is the safest option for the Venezuelan citizens right now. They cannot be relying on their own fiat. That is for sure. They cannot be relying on their own coin Petro either because that is another failure. Bitcoin could have been much better but with the regular blackouts in electricity, they will have to be back on the more basic. The US dollar is the most convenient since it is the most internationally accepted currency.

[ecnalubma]

Lack of electricity can really hinders the cryptocurrency adoption in Venezuela then they physical alternative is still the best option for their financial situation. Only few can really adopt crypto whos capable of maintaining their electricity needs.

[maxdin]

Lack of electricity can really hinders the cryptocurrency adoption in Venezuela then they physical alternative is still the best option for their financial situation. Only few can really adopt crypto whos capable of maintaining their electricity needs.

That's the saddest thing about crypto adoption in poor countries.
Anyway percentage of btc usage in Venezuela is still pretty high so it is worth it anyway

[EdvinZ]

The reality is that buying a dollar that is resistant to inflation was the best decision for the citizens of Venezuela. A stable currency is needed for everyday payments. The study only shows the currency in which purchases are made by Venezuelan citizens, but this does not mean that many of them have not invested in Bitcoin. Most likely, people just bought it in the hope that its price will rise later.

[exstasie]

Yeah, that's one of the big drawbacks of trying to use crypto when SHTF--if there's no power, there's no way to send it unless you can at least keep your cell phone charged, and even then it's not reliable.

For now. I can imagine a future run on mesh networks instead of centralized ISPs and cell data providers. Portable generators, including increasingly efficient hybrid solar powered ones, are becoming cheaper and more common too.

Bitcoin is problematic in conflict zones and downed electrical grids in these early days, but I believe it will be much sturdier within a decade or two.

If the zombie apocalypse ever hits though (or any other situation where the grid permanently fails), then Bitcoin is pretty fucked. But then so is the USD or pretty much any form of money. Bullets and food/water would probably become the dominant currencies in that case.

[TheCoinGrabber]

As Venezuela has become dollarized, inflation has come down. Even their idiot president Maduro admits the dollarization (which was done by citizens spontaneously ignoring their govt's ban on dollars) is a good thing.

A year ago, some of us were hoping that Venezuelans would have adopted bitcoin as their currency (or an alt). But the rolling electricity blackouts not only mean you can't use credit cards, but you can't use cryptocurrency. So they've gone with old fashioned US dollars in cash.

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

I still have high hopes for the more stable African countries that are already accustomed to mobile payments. These countries usually have enough electricity to run their phones but majority of the population is still unbanked. That's one niche cryptos can still fit in if it cannot completely replace the existing mobile system.

[iram3130]

I have this worry about cryptocurrencies from all the time. If there is a situation in a country then the first thing they stop is either Internet or electricity, it will be harder to use a crypto in that moment. Was there any solution for this in crypto.? Has anyone thought of something to solve this issue..?

[merchantofzeny]

Just shows that there is a minimum level of stability needed for crypto to be widely-adopted. No doubt the the USD looks far more attractive. I wonder how things would have been if frequent blackouts was not an issue.

IIRC both USD and BTC were banned by the government. Would BTC have been adopted at the same rate as USD? I mean, it would have been harder for the government to confiscate bitcoins if they ever decided to start raiding homes.

[Sadlife]

I wonder why there was many frequent black outs when bitcoin was being used as the a currency in Venezuela. If electricity was the only issue to use bitcoin, there are many portable generators sold in stores. That's what we've use when our city has been hit by a typhoon.

USD is always the number one choice when it comes to a failing economy but little do they know that USD will hit a recession in coming years and that's where bitcoin will once again be in use, as a safe haven.

[Bezobraznike]

This whole real life case study shows that cryptocurrency won't get adopted in poor countries (because of lack of electricty). It will get adopted in rich countries - rich regulated countries.

   With this part I agree totally! Rich and developed countries will adopt crypto-currencies first. With money you can buy equipment, with
good equipment you will have better infrastructure. In rich countries people are more open minded, they don't live under tough regimes.
   Venezuela is in huge problems for years, thorn apart in fractions. They have problems that crypto-currencies can't solve.

[romero121]

Venezuela after trying to have its own cryptocurrency too unable to recover from the economic collapse. The oil backed Petro initiated by the President gained the attention of the entire world, by the improper execution made it a failure. Later as the citizens have ignored the usage of their own currency and moved to USD small progress in the economy is achieved. Maybe if Venezuela has succeeded out of using cryptocurrency more countries could've got into it.

[alyssa85]

I have this worry about cryptocurrencies from all the time. If there is a situation in a country then the first thing they stop is either Internet or electricity, it will be harder to use a crypto in that moment. Was there any solution for this in crypto.? Has anyone thought of something to solve this issue..?

No. The assumption behind crypto is that electricity will always be there and the internet will always be there.

The internet is pretty robust in that it's designed to work even if some nodes are down. You would have to take down the entire world's internet cables to stop it.

Electricity is more vulnerable. Most electric grids are centralised and can be hacked by hostile countries. And they usually need fuel to power them, so if a country runs out of access to coal or gas, then they're stuffed. Solar panels only work when the sun shines and wind turbines only work when the wind blows, and battery technology is still in it's infancy so power can't be stored.

[Hydrogen]

It will get adopted in rich countries - rich regulated countries.

Years ago, when europeans were afraid the euro would crash and lose all of its value. They bought big screen TV's, electronics. Anything they thought might hold its value better than fiat. Hyperinflation doesn't appear to be a major concern atm. I guess people truly believe militaries of the world will simply invade and steal from foreigners if their government bankrupts.

Investing 101 Protip In The Year 2020: "Worry not if you're government bankrupts on debt. They will simply invade foreigners and steal their capital and goods to compensate."  

Realistically, we should collectively be more concerned over matters relating to deficit and debt. The world it seems has gradually become more "reality optional" and its difficult for people to want to think about anything. Even topics strongly correlated with their own future health or survival.

I have this worry about cryptocurrencies from all the time. If there is a situation in a country then the first thing they stop is either Internet or electricity, it will be harder to use a crypto in that moment. Was there any solution for this in crypto.? Has anyone thought of something to solve this issue..?

The closest thing I've heard of is kong cash based cryptocurrency.

https://kong.cash/

But even that is electronic, if to a lesser degree. Based on smart contracts if I'm remembering correctly.

[Darooghe]

I don't think more than 50%, But if it was true, still lot of of people don’t have USD accounts and getting dollars in cash. Some stores started to accept PayPal, but they got tired of accounts being blocked or limited by the company pretty quickly. Cryptocurrencies are accepted in some places, but they are unstable makes them not practical for everyone. So, I think stores might be forced in the near future to accept online transfers from places like uphold, payeer, perfectmoney, etc. because is easier to get digital dollars from somebody abroad using these services and there are places where people can actually buy dollars this way without an international bank account.